Friday, October 2, 2026 11:28 AM

Arun-3, Mahakali and MCC

On/Off the Record

By P.R. Pradhan

The Arun-3 project was developed under the then King Birendra’s initiative for constructing a huge hydropower project producing electricity at a cheap price. The World Bank, the German government and the Japanese government had taken initiative to manage funds for the project. The Nepal government had already spent billions of rupees from the feasibility study to the construction of a road to the project site.

Meanwhile, the then Panchayat system collapsed and multiparty democracy was introduced following the India sponsored people’s movement. India was against the construction of the Arun-3 project, the largest hydropower project in Asia during that time. Understandably, India wanted to capture such big projects, which finally came true today. All the credits go to the UML led a minority government, which had written a letter to the World Bank chairman for not approving the project. Madhav Nepal, then general secretary and also the deputy prime minister and foreign minister and the late Manmohan Adhikary, then prime minister were instrumental in the rejection of the project. They had humiliated the World Bank asking how much commission amount was paid to the erstwhile Panchayat authorities for imposing such a huge project in Nepal! The then UML leaderships had served the Indian interests while doing so.

The other story is rectification of the Mahakali Treaty. The Nepali Congress government led by Girija Prasad Koirala had already inked a deal by defining it as an agreement but not a subject for a treaty. Later, after a long debate, the Supreme Court had defined the Mahakali deal is the subject for a treaty not an agreement.

Then after, the then government led by Girija Prasad Koirala started a move to rectify the Mahakali deal from parliament. The entire nation was divided in support and against the deal. The UML was divided into two factions – pro-Mahakali and anti-Mahakali groups. Bamdev Gautam had led the anti-Mahakali group, whereas, Madhav Nepal, K.P. Oli, among others were in favour of the treaty.

Oli was found saying that the sun would rise from the west after inking the Mahakali Treaty. They were advocating that Nepali currency’s value will be two times more than the Indian currency’s value, i.e. Nepali currency 1: Indian currency 2. Finally, the Mahakali Treaty was rectified by the Parliament with a two-thirds majority. Still today, the very leaders are at the center of the Nepali politics and even after 26 years of the signing of the Mahakali Treaty, the project has not been started. Instead, India has continued illegally occupying the Kalapani-Limpiyudhara-Lippulekh territory of Nepal. Those who signed on the Mahakali Treaty, didn’t define the India encroached part as Nepali territory. Nepal was deceived by signing the Mahakali Treaty. We were fooled from the foolish job of the two-thirds of MPs who rectified the Treaty from parliament.

When the actors, their attitudes and the system are wrong, we will always be deceived and the nation will be defeated.

Today, the entire nation is divided on MCC. One section, mostly those journalists, academicians, known to be pro-West, are advocating for immediate rectification of MCC, whereas, the other section, including the communist political parties are saying that MCC is against the nation’s interests. The Americans are putting excessive pressure with warnings to accept the 500 million US dollar grant project by 28 February. If Nepal rejects the MCC compact, the Americans have given the warnings: the US government would review its Nepal policy; Nepal will be considered to be under the Chinese influence; the Americans may lobby for stopping support to Nepal from the countries under the American influence and also from the international financial institutions including the World Bank, IMF, ADB, and others, according to reports appeared in local broadsheet dailies.

Not the Americans but the Nepali political leaders had approached for the American grant. Firstly, when Baburam Bhattarai was the prime minister, the government had approached the American government for the grant support. Then, when Pushpakamal Dahal of the Maoist Center was the prime minister, his foreign minister Krishna Bahadur Mahara had inked a MoU with the American government for the American grant. Later, the then finance minister Gyanendra Bahadur Karki under the government led by Sher Bahadur Deuba had visited the US and inked the agreement in 2017. In this regard, the Nepali political leaders, who have initiated the MCC grant project, are solely responsible for accepting such a controversial support. Why our leaders didn’t study the provisions mentioned by the MCC in accepting the pact, it is surprising. The Nepali leaders didn’t do homework better in approving the American grant.

Sure, the Nepali leaders gave space to the Americans to use harsh words against Nepal. In the long history of diplomatic relations between Nepal and the USA, the US government or its diplomats had never used such undiplomatic words against Nepal, however, due to the immature behavior of the Nepali leaders, the American diplomats have come down to dominate Nepal.

Needless to say, all the government organs were functioning in a better way during the Panchayat days under the leadership of the Kings. The foreign policy of the nation was very influential during those days. Since dawn of the multiparty democracy and then the present loktantra, Nepal’s foreign policy, due to the wrong handling, has reached to a vulnerable state.

Nepal, considering her geopolitical position, should remain as a non-aligned nation by balancing her relations with two immediate neighbours India and China. This is a natural priority for Nepal. If India tries to perform hegemony on Nepal, Nepal should give priority for enhancing relations with China, this should be the next alternative for Nepal. Even, to save her sovereignty and independence, Nepal should always try to win confidence of Beijing, this is Nepal’s compulsion. Any act to annoy China could be very costly for Nepal but the present day governments have undermined Nepal’s strategic relations with China. Even after months, Nepal has not been able to assign her ambassador to China. If the political leaders in the government try to undermine the security concern of China, it will be more costly for Nepal. The US is a friendly country far away from Nepal by distance. Therefore, the practical policy for Nepal is to maintain balanced and cordial relations with both the neighbours India and China. If MCC is for containing China under the Asia-Pacific Strategy, Nepal must reject the grant.

Unfortunately, of late, the self-centered leaders have learnt to have developed an understanding for rectifying MCC from Parliament!

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